Lpl bond platform
any insights into the lpl bond trading desk…am in recruiting phase and from what i can tell…they do not maintain any inventory…and they charge a quarter to a half to just pick up an offering off the street…from retail perspective if i am just selling off the offer and paying their traders on top of it aren’t i gonna stick out ?? {bond people might relate more to this forum}…i mean how am i gonna be competitive selling bonds at lpl…{ such a platform seems to suit fee based more than transaction oriented reps…i am 100% transaction oriented but looking to convert to fee based…just concerned about starving in the meantime}…any inputs…? any one doing a lot of fixed income at lpl…what are your thoughts??
good question. any thoughts?
Bonds are not a large part of my business. In general, though, I haven’t found it to be a problem. Don’t forget that if you’re at a wire, that trader is probably putting a point or two in that bond that he has in inventory for you.
The LPL platform allows you access to a large inventory that is held at multiple firms.
I also have found no problem getting trades executed, in either direction.
What about new issue preferreds?
Actually LPL only allows reps to access bonds from 1 vendor, namely the municenter…for everything else they ask you to call the trading desk…{ the municenter does allow mulitiple firms to upload their inventory but only a few firms actually do and there is no obligation for them to mark bonds to market i.e prices can be off by quite a big margin and you find yourselves in a truly buyer beware market.} any bond guys here??
Jeno, of the bond trades I've done online, I've found them to be in line with the market and I don't believe that you'll stick out. Then again, I can't tell you the last time I had to bid competitively for a deal...my clients are loyal and in return, I don't over-mark my bonds. Every once in awhile, you'll see a bond priced away from the market and a quick call to a trader will verify that. I actually tried to order one that was priced very attractively and it was rejected with a note that the price was stale, so what you are hearing is correct. The online inventory is fine, but if I'm looking for something that I don't see, the bond traders can generally find it for me.
Who sells bonds anymore? Join the 21st century.
[quote=joedabrkr]Bonds are not a large part of my business. In
general, though, I haven’t found it to be a problem. Don’t forget
that if you’re at a wire, that trader is probably putting a point or
two in that bond that he has in inventory for you.
[/quote]
Not at Merrill! No mark ups at the bond desk Our muni inventory
is our own, plus we show multiple firms and there prices, so we can buy
them and see no mark up. (very few peopel know this).
[quote=rightway][quote=joedabrkr]Bonds are not a large part of my business. In general, though, I haven't found it to be a problem. Don't forget that if you're at a wire, that trader is probably putting a point or two in that bond that he has in inventory for you.
[/quote]
Not at Merrill! No mark ups at the bond desk Our muni inventory is our own, plus we show multiple firms and there prices, so we can buy them and see no mark up. (very few peopel know this).
[/quote]
no markup??
[quote=whalehunter]
[quote=rightway][quote=joedabrkr]Bonds are not a large part of my business. In general, though, I haven’t found it to be a problem. Don’t forget that if you’re at a wire, that trader is probably putting a point or two in that bond that he has in inventory for you.
[/quote]
Not at Merrill! No mark ups at the bond desk Our muni inventory is our own, plus we show multiple firms and there prices, so we can buy them and see no mark up. (very few peopel know this).
[/quote]
no markup??
[/quote]My thought exactly!
Rightway,
Wednesday, go in and pick a bond, either actually buy it, or just call down to the bond desk for a bid as if you own 50M of them. Just see if they offer you what they're asking for it (strip out the point that they're pretending to pay you for it, when they're actually paying you 40 beeps).
What's the bid ask spread on institutional Treasuries? How many times higher is the spread that your bond just showed? That's what one might just say is a MARKUP.
I use Bonddesk. I find that it is miles ahead of the offerings I used to get at Barney (and they were pretty good, far as I knew).
Mr. A
I know what a MARKUP is.
I will get something from ML and post it up here if I can supporting my
claim. I know the Muni desk does not mark up the bonds there
prior to delivering them to us (unlike nearly all other firms), they
leave that to the rep in commission accounts. I also run pretty
much everything in discetionary advisory accounts, so we cannot put
bonds where ML is acting in agency capacity in those accounts (marked
by ML or the rep.) Treasuries and Corporates are the same. I will
see what I can find next week.
So when you sell a bond to the desk for 98 less a half and they offer it back to you at par with a point there is no markup??
[quote=whalehunter]So when you sell a bond to the desk for 98 less a
half and they offer it back to you at par with a point there is no
markup??[/quote]
No markup, just really wide bid/ask spreads.
[quote=whalehunter]So when you sell a bond to the desk for 98 less a
half and they offer it back to you at par with a point there is no
markup??[/quote]
Oh my GOD will you please stop tossing examples of marking bonds up here, I KNOW WHAT IT IS!
This is an example of both the desk and the rep marking the
paper. In your example they buy it from my client at 98 for which
I get multiple bids (as it shows on their statement), and sell it back
to me at 98. I don’t mark it up because I cannot (advisory
account) and neither does the desk. I don’t know what to tell
you, thats how it is. Maybe I am confused because I do not
operate in traditional brokerage accounts, only advisory fee based. I
will check on it folks.
Happy New Year!
[quote=rightway][quote=whalehunter]So when you sell a bond to the desk for 98 less a
half and they offer it back to you at par with a point there is no
markup??[/quote]
Oh my GOD will you please stop tossing examples of marking bonds up here, I KNOW WHAT IT IS!
This is an example of both the desk and the rep marking the
paper. In your example they buy it from my client at 98 for which
I get multiple bids (as it shows on their statement), and sell it back
to me at 98. I don’t mark it up because I cannot (advisory
account) and neither does the desk. I don’t know what to tell
you, thats how it is. Maybe I am confused because I do not
operate in traditional brokerage accounts, only advisory fee based. I
will check on it folks.
Happy New Year!
[/quote]
Rightway if you’re talking advisory that’s an entirely different animal. They CANNOT put anything in those trades because in that particular instance you and the firm are a fiduciary. At many firms these trades go through an entirely different desk. That’s also why you get bids from multiple firms, so as to fulfill your duty as fiduciary to get the best execution. It’s a big deal. It’s such a big deal that it is (in part) I suspect why LPL does not carry it’s own inventory. They act as agent on all trades, whether brokerage or advisory.
Hope that helps to clear things up.
[quote=joedabrkr] It’s such a big deal that it is (in part) I
suspect why LPL does not carry it’s own inventory. They act as
agent on all trades, whether brokerage or advisory.
[/quote]
Another reason is so as not to have to mark-to-market huge portfolio’s
of bonds that you are activly trading. Major accounting nuisance.
[quote=rightway][quote=joedabrkr]Bonds are not a large part of my business. In general, though, I haven't found it to be a problem. Don't forget that if you're at a wire, that trader is probably putting a point or two in that bond that he has in inventory for you.
[/quote]
Not at Merrill! No mark ups at the bond desk Our muni inventory is our own, plus we show multiple firms and there prices, so we can buy them and see no mark up. (very few peopel know this).
[/quote]
Wrong, your desk is marking the bonds up and not showing this to you. Merrill, as with all the wires, operate their bond trading desks as profit centers. UBS was putting two points on some bonds, actually most bonds. All, the wires, as with all the regionals, own their own inventory. This is actually one of the reasons for the markup. It cost money to carry the inventory. Plus the costs of repricing the bonds if the market moves away from them. Usually they don't have to reprice because some noob will solve their problem for them, but it's still a cost. Add in profit, on which most of your trader's income is based, and their is plenty of markup on wirehouse bonds. The trader's job is to turn a profit trading bonds for the house. With the wires there is a built in supply of FA buyers. And, by the way, they could care less if they screw your client. Which is why you need to care.
[quote=Lex123]Who sells bonds anymore? Join the 21st century.[/quote]
I sell bonds everyday. I must have missed the memo that bonds are out of vogue this season.
[quote=Lex123]Who sells bonds anymore? Join the 21st century.
I sell bonds everyday. I must have missed the memo that bonds are out of vogue this season.[/quote]
...I wondered when you'd jump on that...
[quote=BondGuy]
[quote=rightway][quote=joedabrkr]Bonds are not a
large part of my business. In general, though, I haven’t found it
to be a problem. Don’t forget that if you’re at a wire, that
trader is probably putting a point or two in that bond that he has in
inventory for you.
[/quote]
Not at Merrill! No
mark ups at the bond desk Our muni inventory is our own, plus we show
multiple firms and there prices, so we can buy them and see no mark
up. (very few peopel know this).
[/quote]
Wrong, your desk is marking the bonds up and not showing this to you. Merrill, as with all the wires, operate their bond trading desks as profit centers. UBS was putting two points on some bonds, actually most bonds. All, the wires, as with all the regionals, own their own inventory. This is actually one of the reasons for the markup. It cost money to carry the inventory. Plus the costs of repricing the bonds if the market moves away from them. Usually they don't have to reprice because some noob will solve their problem for them, but it's still a cost. Add in profit, on which most of your trader's income is based, and their is plenty of markup on wirehouse bonds. The trader's job is to turn a profit trading bonds for the house. With the wires there is a built in supply of FA buyers. And, by the way, they could care less if they screw your client. Which is why you need to care.
[/quote]Not quite in my case Bondguy. I buy the bonds from a separate inventory/desk (separate from the non-advisory retail reps) when placing them in accounts (my accounts are advisory accounts where I act as portfolio manager). These bonds are not allowed to be marked by the firm (or more obviously, me). Joe was right. In these accounts we do act as a Fiduciary and can only profit from the fee's I charge based on assets, not from marking anything. To your point on price movement with inventory you are right, but remember our inventory is much smaller because it serves a much smaller group of reps. We also get to play with money managers if there is not something we need in the inventory, institutional prices and they fall under the same rules as me. In addition, I cannot buy IPO's, buy or hold any ML proprietary products (this would be a conflict of interest), and am subject to far more scrutiny than a typical retail rep.
Sorry for all of the confusion folks!
o.k. enough with bonds already. Jeez!!!
o.k. enough with bonds already. Jeez!!!
Here's an idea for you.
If the topic is of no interest to you, don't look at it.
MSRB = Full Disclosure. It is fairly easy for me to find out what the dealer-to-dealer markups are on just about any bond. It is actually quite interesting when a retail client is being told they are getting institutional pricing when I can clearly see the markups between 2 different profit centers on the same bond.
"It is actually quite interesting when a retail client is being told they are getting institutional pricing when I can clearly see the markups between 2 different profit centers on the same bond."
That's a DIFFERENT Institution the guy is referring to.
It's more like "If you buy this bond, you should be institutionalized!"
Or, "I need you to buy this bond because my daughter is entering the institution of marriage, at $300 a head!"
No but seriously folk, are you going to tell us how we can see the markups or are we supposed to be content that you can see them?
Wirehouses get block pricing on bonds, and mark them up even though it
appears to you as par. Then you mark it up more, if you want. An offer
credit may be .25, when the wirehouse already made 200 bps, I think as
someone stated.
Ask any institutional bond trader in your respective offices, if you have
one, and they will tell you how sh*tty their payout is on $1M bond trades.
Indy brokers get way more payout on the exact same annuities as
wirehouse brokers too. Wirehouses skim some off the top and hide it
from the broker. Joe can probably vouch for this 100-200 bps
discrepancy.
BTW - I don’t lock people up in long term bonds in a rising interest rate
enviroment, when I can get 5.5-7 percent monthly income in top-quartile
bond funds. Maybe when interest rates go up another few points, I’ll start
buying individual bonds again. Every once and a while, there’s a good
agency step-up, etc. MARS/MARPS are great too if you want to make zero
profit.
[quote=Whomitmayconcer]
It’s more like “If you buy this bond, you should be institutionalized!”
[/quote]Hence the benefit of bond ETF’s. With BND you get the whole Lehman
Aggregate of IG bonds for 11bp, a tight spread on the shares, and
instant liquidity as needed.
All we need is a muni ETF and then buying single bonds will be mostly obsolete (except for speculation and defeasance).
Whoever started this forum - one way to find out how competitive the pricing is compared to where you are now is have the recruiter you are working with and you compare pricing. That is, pull up your current offerings and compare them to the prices at LPL. I am good friends with an advisor that joined LPL in my area a few years after I did who was at UBS. He told me during his visit to the home office, he had the UBS bond desk on the phone and was comparing the prices of the bonds there to what LPL was offering. HE claims that about 60% of the time LPL had the same or better price. To me, it seems like the only way to know for sure.
I am not sure if this helps to answer the question, but I would like to post an educational response.
Most desks, especially wirehouses, do inventory. If they inventory, they do put in a mark. Generally, the mark will be greater depending on the maturity. To correct an earlier post, however, they are normally NOT 2 points. (This is $20 per bond. A short term bond would be like $1.25 per bond.)
If anyone ever wants to know if they are "in the market" for a muni or corporate, I would suggest going to investinginbonds.com and typing in your cusip to see what last prices are. The info. is a little fuzzy. (It doesn't tell buying vs selling.)
Hope this helps.
1)In an account that is a wrap account, there can be no mark up by Bond desk or rep, period.
2) LPL guy- how about ask to see some offerings on some bonds from their desk and compare it to www.investingbonds.com. It will tell you if your firm is in-line.
3) Bonds can be great products. One thing that I notice is that the producers who sell bonds generally have higher net worth clients. Also, if you compare bonds to bond funds, generally the client has less commission overall paid out.
Just some thoughts.
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